Question

Aviation and aerospace logistics operations differ from those of retail or general manufacturing enterprises. Identify three areas where aviation/aerospace logistics and supply chain planning differs from general logistics systems design. Elaborate on those differences and illustrate your comments with a practical example of each.

Answer 1

Aviation and Aerospace industry has different challenges in Supply Chain Management compared to any other traditional manufacturing or even a retails industry. For example, Boeing 747-8, has 6 million individual components, which are manufactured in about 30 countries, by 550 suppliers.

Hence, challenges can be classified as:

• Multi-tier purchase orders, shipments from global suppliers all the way to their assembly plants, management of inventories is not just critical but complex in operations. Example- a weak or inefficient IT infrastructure and Information system can cause variety of hiccups in every stage of Purchase order/ Sales Order or Dispatch/ Receipt of inventories. A series of such faults result in Bull-Whip effect- severe blockade of inventories. It further results in obstacles for manufacturing/ assembling of different parts of an Aeroplane plus huge financial losses

• Legal and Export-Import taxation works are hectic as well as paramount. Even a slight mistake can cause millions and billions of Dollars to buyer or supplier. Example, daily changes in foreign currency values, hence calculations change. Also, variety of INCO (International Commercial) Terms are used in international trade such as Freight on Board (FOB), Ex-works Factory, Ex-works Port, Cost-Insurance and Freight (CIF), Free Carrier (FCA), Free Alongside Ship (FAS) etc. are complicated terminologies and can even cause confusions or human errors, even for the daily experts. Damage is always monetary in nature.

• Reverse Logistics can be severe problem. When one critical or a complete lot of any critical components is found to be defective, example an Air Turbine rotor then sending such items is not only a costly affair, but also involves taxation and hell of paper works related to import-exports. It will hamper the manufacturing process of Supplier, causing receipt, replacement and dispatch of Rotor components again. It will also obstruct the assembling process of rotors during the Plane manufacturing.